Debenhams starts warehouse automation

Debenhams has activated the first stage in the automation of its distribution centres as part of a new operating model.

The retailer has been rolling out direct-to-floor distribution, and it said certain stores are now receiving their deliveries fully sorted by division, making processing and floor replenishment in stores much more effective, it said in its first half results.

The new operating model is designed to simplify processes and introduce a flatter management structure which will support faster decision-making.

“In the first phase, we have removed 320 store management roles, and plan to reinvest some of the savings in customer-facing staff. We have reduced the number of staff grades in our UK support centres from 17 to nine, and consolidated our London office from five floors to four, reducing occupancy costs in the building by approximately 20 per cent.

“Following the successful roll-out of Direct-to-Floor distribution, we have also activated the first stage of the automation of our distribution centres. Certain stores are now receiving their deliveries fully sorted by division, making processing and floor replenishment in stores much more effective.”

During 2017 the group embarked on a strategic warehouse restructuring which included warehouse automation and the closure of its distribution centre at Northampton and certain regional warehousing facilities. Total exceptional items before tax recognised during the 26 weeks ended 3 March 2018 in relation to the strategic warehouse restructuring were £6.5 million.

In February, Debenhams launched a new central planning function which is focusing on the way it merchandises and plans ranges more closely to the customer.

It said: “This is an important part of our plan to build our ranges online first, using data analytics.”

Debenhams restructuring activity is expected to underpin an additional annualised savings of £20 million, of which £10 million will be delivered in the second half, and the balance next year.

The retailer said results had been affected by a disappointing Christmas which saw an increase in competitor discounting Group EBITDA fell 30.6 per cent to £103.5 million in the half year to 3rd March, while sales were down 1.6 per cent at £1.65 billion.